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Develop Don't Destroy (Brooklyn), Inc. v. Empire State Development Corp.

Supreme Court, New York County

September 20, 2013

Develop Don't Destroy (Brooklyn), Inc., et al., Petitioners,
v.
Empire State Development Corporation, FOREST CITY RATNER COMPANIES, LLC, Respondents.

Unpublished Opinion

Counsel for Petitioner(s): Jeffrey S. Baker, Young Sommer Ward Ritzenberg Baker & Moore LLC, Executive Woods, Counsel for Respondent(s):

Philip E. Karmel, Bryan Cave LLP, Jeffrey L. Braun, Richard G. Leland, Fried, Frank, Harris, Shriver & Jacobson

MARCY FRIEDMAN, J.S.C.

Petitioners Develop Don't Destroy (Brooklyn), Inc. (DDDB) and Prospect Heights Neighborhood Development Council, Inc. (PHNDC) move, under the New York State Equal Access to Justice Act (EAJA) (CPLR 8601), for payment by respondent Empire State Development Corporation (ESDC) of attorney's fees and expenses incurred by petitioners in prosecuting these Article 78 proceedings. [1] The DDDB petitioners seek $169, 626.00 in fees (not including the fees associated with the instant motion). The PHNDC petitioners seek $146, 000.00 in fees and $7, 900.00 in expenses.

Petitioners commenced these Article 78 proceedings to challenge the ESDC's affirmance, in September 2009, of a Modified General Project Plan (MGPP) for the Atlantic Yards Project in Brooklyn. They argued that the ESDC failed to comply with the State Environmental Quality Review Act (SEQRA) by affirming the MGPP without requiring a Supplemental Environmental Impact Statement (SEIS). Petitioners' claims in this proceeding are discussed at length in three prior decisions to which the court refers. (See 26 Misc.3d 1236 [A] [2010], 2010 NY Misc. Lexis 518 [denying petition], 30 Misc.3d 616 [2010] [granting reargument and remanding for further findings]; 33 Misc.3d 330 [2011] [granting petition and requiring SEIS], affd 94 A.D.3d 508 [1st Dept 2012].)

Petitioners claim that they are prevailing parties in this proceeding, and are therefore entitled to attorney's fees and expenses under the EAJA. (Baker Aff. In Support ¶ 2; Butzel Aff. In Support ¶ 10.) Respondent argues that petitioners are not entitled to attorney fees under the EAJA because the proceeding was not a "civil action brought against the state." In addition, respondent argues that petitioners are not prevailing parties within the meaning of the EAJA, and that the ESDC's position in the Article 78 proceeding was "substantially justified." (Resp.'s Memo. Of Law In Opp. at 1.)

Applicability of the EAJA

The EAJA provides, in pertinent part, that "a court shall award to a prevailing party, other than the state, fees and other expenses incurred by such party in any civil action brought against the state, unless the court finds that the position of the state was substantially justified or that special circumstances make an award unjust." (CPLR 8601 [a].) Under the EAJA, " [s]tate' means the state or any of its agencies or any of its officials acting in his or her official capacity." (CPLR 8602 [g].)

The EAJA "was enacted to improv[e] access to justice for individuals and businesses who may not have the resources to sustain a long legal battle against an agency that is acting without justification.'" (Matter of New York State Clinical Lab. Assn. v Kaladjian, 85 N.Y.2d 346, 351 [1995], quoting Governor's Approval Mem, L 1989, ch 770, 1989 NY Legis Ann, at 336.) The State EAJA is modeled after the Federal Equal Access to Justice Act (28 USC § 2412[d] [1] [A]). Like its Federal counterpart, the EAJA, with exceptions not here relevant, applies to "any civil action or proceeding brought to seek judicial review of an action of the state...." (CPLR 8602 [a].)

The first inquiry, then, is whether respondent ESDC is the state or a state agency for purposes of the EAJA. The parties have not cited, and the court's own research has not located, any case that has determined whether the ESDC, a public benefit corporation, qualifies as a state agency within the meaning of the EAJA where, as here, it has served as lead agent for SEQRA review of a development project. However, substantial authority holds that the determination of whether a public benefit corporation is a state agency must be made on a case-by-case basis, taking into account the nature and purpose of the entity, the functions it performs, and the statute at issue.

As the Court of Appeals explained in John Grace & Co., Inc. v State Univ. Constr. Fund (44 N.Y.2d 84, 88 [1978]):

"The mere fact that [a public benefit corporation] is an instrumentality of the State, and as such, engages in operations which are fundamentally governmental in nature does not inflexibly mandate a conclusion that it is the State or one of its agencies for purposes of [the particular law at issue]. Instead, a particularized inquiry into the nature of the instrumentality and the statute claimed to be applicable to it is required."

In John Grace & Co., the Court was called upon to determine whether the State University Construction Fund was the state or an agency for purposes of a law authorizing adjustments to public construction contracts to reflect increased costs of certain materials. The Court concluded that it was not, because the Fund was created to receive and administer monies for the construction of facilities for the State University of New York, and the legislature explicitly chose to impose different requirements for construction contracts made by the Fund than for contracts made by the State and other public entities.

In Matter of Apollon v Giuliani (246 A.D.2d 130 [1st Dept 1998]), an Article 78 proceeding challenging a City University of New York (CUNY) tuition increase for community colleges, the issue before the Court was whether CUNY was the state or a state agency for EAJA purposes. Citing John Grace & Co., the Court noted that "[t]he Court of Appeals has required a case-by-case determination of whether an entity like CUNY, which is independent of the State but is an instrumentality of the State and performs a fundamentally governmental' function, will be treated as the State for a particular purpose." The Court held that CUNY was not subject to the EAJA because the "case exclusively involves community colleges, and the challenged funding decisions all related to the City's obligation to fund those colleges." (Id. at 135.) However, the Court contrasted senior colleges, with respect to which CUNY's role was "more closely analogous" to a state agency. (Id.)

In Matter of Levy v City Commission on Human Rights (85 N.Y.2d 740, 745 [1995]), the Court of Appeals further clarified:

"The general theme of [the Court's] prior decisions is that public authorities and other public benefit corporations are created to accomplish a specific purpose or mission and are endowed with the freedom and flexibility necessary to achieve that mission. They are independent and autonomous' to the extent that they should be free from requirements imposed on other State agencies that would interfere with the accomplishment of the public corporation's purpose."

There, the Court held that the New York City Transit Authority, a public benefit corporation, was subject to the New York City Human Rights Law. While its holding was based in part on statutory construction, [2] the Court reasoned in the alternative: "The purpose of the New York City Transit Authority is to acquire and operate transit facilities. It cannot be seriously contended... that compliance with the prohibitions against ...


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